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New Medicare Law Discriminates Against Certain Providers

By Naomi Lopez and Sue Blevins
April 9, 1998

In his recent state of the union address, President Clinton stressed that Americans should have a choice of doctors. Isn't it ironic? His recently passed Balanced Budget Act grants only certain types of doctors the right to privately contract with seniors. If President Clinton is serious about improving patient choice, then the first step he should take is to make sure seniors are free to choose and pay privately for all types of providers. As it stands now, seniors do not have that freedom.

You may be familiar with Section 4507 of the Balanced Budget Act that took effect on January 1. This provision says that any doctor who accepts private payment from a senior (for a Medicare-covered service) must stop seeing all Medicare patients for two years.

Some members of Congress (from both major political parties) claim that this provision gives seniors greater choices than they had under the old Medicare law. That is because under the old law, the Health Care Financing Administration (HCFA) harassed doctors who attempted to privately contract with seniors, even though a federal judge found nothing in the law that prohibited private contracting.

The new law can relieve doctors from HCFA harassment, but only if they stop seeing all of their Medicare patients for two years. This provision hardly gives seniors more choices of doctors.

Doctors Denied Right to Contract

There is an even greater problem with Section 4507 that no one is talking about. This new Medicare law grants the limited right to privately contract to only two types of [medical] providers: doctors of medicine and doctors of osteopathy. Other types of doctors were denied the legal right to contract with seniors. Those providers include dentists, oral surgeons, optometrists, chiropractors, and podiatrists.

Why should Americans be concerned about this new limit on their choices? Because every year, nearly one-third of seniors seek medical treatment from oral surgeons, chiropractors, optometrists, and podiatrists. (Data on dentists were not readily available). According to the most recent HCFA data, in 1995:


* Oral surgeons served 103,700 seniors

* Chiropractors served 1.4 million seniors

* Optometrists served 3.8 million seniors

* Podiatrists served 5 million seniors

All told, these doctors performed over 48 million services for Medicare patients in 1995. That is why if Congress does not fix Section 4507, millions of seniors will be prevented from choosing and paying privately for doctors they frequently use.

Senator Jon Kyl (R-AZ) and Representative Bill Archer (R-TX) have introduced legislation that would fix the problem created by Section 4507. "The Medicare Beneficiary Freedom to Contract Act" (S.1194/H.R.2497) lifts the two-year Medicare ban on doctors who choose to sign private contracts with seniors.

Additionally, their legislation expands the definition of physician to include all types of doctors, including dentists, oral surgeons, optometrists, chiropractors and podiatrists. Most importantly, their legislation clarifies that seniors have a legal right to choose and pay privately for the doctors of their choice.

Opponents of private contracting claim that such policy would increase Medicare fraud and abuse. There is no doubt about it, the current Medicare system is fraught with enormous fraud and abuse. Federal auditors found that in 1996 alone, Medicare fraud amounted to $23 billion. That amounts to $63 million every day! However, allowing seniors to contract privately for health care could actually reduce Medicare fraud. That is because the private health insurance industry could never tolerate fraud amounting to $63 million per day.

There is another important reason why seniors would choose to pay privately for services that Medicare might cover. Currently, Medicare does not make clear exactly what they cover and what they do not cover under all circumstances. Thus, many patients and doctors have to second guess how HCFA would rule on a medical coverage decision. In the end, many patients are forced through the bureaucratic Medicare appeals process to challenge denied claims. In some cases, patients have to hire expensive lawyers to determine what medical care is reimbursable under their particular circumstances. Yet, if seniors were allowed to privately contract, they could determine ahead of time what medical care is to be covered under all circumstances.

Lawmakers who want to force seniors into Medicare and deny them of their medical liberty should come forward and say so honestly. However, those lawmakers who believe in the principles of liberty and economic freedom should practice what they preach: Restore the liberty that was stripped from seniors and their doctors under Section 4507 of the recently-enacted Balanced Budget Act.

Naomi Lopez is research associate at the Institute for SocioEconomic Studies in White Plains, NY and Sue Blevins is president of the Institute for Health Freedom in Washington, DC.

This article was originally published in the March/April 1998 issue of Health Freedom Watch.